In Sep’s FOMC meeting last week, the Fed maintained its target range at 5.25% to 5.5% and quarterly economic projections revealed that 12 of 19 Fed officials postulate that rates will rise one more time this year. Nevertheless, moving forward, Fed Chair Powell said the Fed is to “proceed carefully”.
Powell clarified that Fed rate hikes are ending, but rates need to stay higher for longer as the economy remains strong as seen from the new Summary of Economic Projections
While median forecast for core PCE inflation at end-2023 was revised downwards to 3.7%, headline PCE inflation was revised up to 3.3%
Real GDP growth forecast was revised upwards to 2.1%, over double the previous forecast
2023 unemployment rate forecast revised down to 3.8%, suggesting recession is less likely
Last week, applications for US unemployment benefits reached their lowest level since January, indicating a robust labor market
As such, policymakers anticipate less monetary easing next year, partly due to a stronger labor market, the median forecast for the federal funds rate at 5.1% by the end of next year.
We expect CSOP USD Money Market Fund to continue to benefit from relatively high yield. As of 20230922, gross yield was at 5.72%^ and net yield was at 5.23%.
Source: CSOP, Bloomberg, as of 20230922. ^ Gross yield is based on annualized yield of underlying holdings. 7-day net yield is calculated based on calendar days and NAVs in 5-decimal.
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